Why Privacy Advocates Are Worried About Newsom's Call for a 'Digital Dividend'

In his recent State of the State address, Gov. Gavin Newsom said California consumers should make money from all their data. (Jeff Chiu/AP/Pool)

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hat you do online. When you’re home. When you’re not. Where you shop. Who you friend and date. What apps you download and how you use them. Your age, sex, income, credit score, and location day and night. We trade thousands and thousands of points of data like this every day to use websites like Facebook, services like Gmail and apps like Tinder.

Personal data has become the currency of the Internet. Things are free online because you’re paying with your data. Companies mine that data, and then monetize it through advertising.

Big data collectors like Google and Facebook record not only what you do on their sites, but also elsewhere on the Internet through tracking devices like browser cookies. They combine all that information with data they acquire and purchase from third parties. The result is a big ball of data about you that can be used by advertisers for marketing.

'This digital dividend scheme is really a trick for consumers to get them to agree to allow their information to be collected even more.'Jeffrey Chester, Center for Digital Democracy

Most smaller data collectors, like say a free smartphone game, sell the data they gather to brokers. Companies that have platforms to reach eyeballs — like Google and Facebook — roll up their own balls of user data and charge advertisers to target marketing to its users based on that information.

“I’ve asked my team to develop a proposal for a new ‘data dividend’ for Californians, because we recognize that your data has value and it belongs to you,” he said.

This idea isn’t new.

Private companies like Datacoup and Meeco have tried to get consumers to sell their data directly to advertisers. The problem these companies have run into is that even selling even your most personal, intimate details won’t actually bring you that much money.

That's because one individual’s information isn’t worth that much on its own. Even U.S. consumers, who, because of their buying power, have the most valuable personal information in the world, have only been able to make tens of dollars a month on these data marketplaces.

Data really starts to gain value when companies have information on millions or billions of users, and when they control the mediums for advertisers to access those users.

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When news came out that Gov. Newsom wanted to pursue a digital dividend, some suggested that this could be trouble for companies like Google and Facebook. Could they survive if they were forced to pay users for their data?

But it's all speculation so far. There are no details on how the dividend would work. Would companies have to provide cash? Would they have to give customers an option of paying to keep their data private? Or could Facebook and Google make their services free in exchange for user data, which is what they’re already doing?

Google and Facebook have not made a public comment about Newsom’s proposal.

It is impossible to tell how, if at all, the dividend would impact the business model at Google, Facebook or any other company that traffics in our personal data.

What we do know is that privacy advocates have not rallied around the call for a digital dividend.

Jeffrey Chester, for one, is concerned that Newsom and others are even floating the idea of paying people for data.

Chester is with the Center for Digital Democracy, a privacy advocacy group. He said giving people a digital dividend could actually speed up the collection of data rather than slow it down because it will regularize the idea that our personal information should be bought and sold.

“This digital dividend scheme is really a trick for consumers to get them to agree to allow their information to be collected even more than what’s going on today,” Chester said. What we really need to do, Chester said, is to protect data from being collected and used by corporations to shape our experiences online and off.

The stakes are high Chester said. Our online data has not only become the currency of the internet, it is increasingly being used to shape how we think of ourselves and each other. It is the grist for the algorithms that construct our online worlds.

What ads do you see online? What discounts are you offered? What stories pop up in your social media feed? Who should you friend? Who are you paired with on a dating app? What restaurants are recommended to you? What videos are shown to your children? What data are the companies making these decisions looking at? Who collected it? How accurate is it? How is it changing the way you see the world?